LTCUSD has been on a tear since breaking above its triangle consolidation pattern on the 4-hour chart. However, the rally is stalling as price is testing the top of an ascending channel on the same time frame.
If the resistance holds, LTCUSD could head back down to the channel support around $48 or at least until the middle of the channel around $52. The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside, which means that the rally is more likely to resume than to reverse. These moving averages are located around the bottom of the ascending channel, adding to its strength as a floor.
Stochastic is already indicating overbought conditions, which means that buyers are exhausted and could let sellers take over. RSI is pointing up to signal that there’s some bullish pressure left but is also dipping into overbought levels to suggest a potential correction.
Litecoin demand picked up as fresh concerns about bitcoin cash resurfaced, reviving potential incompatibility issues in the activation of SegWit. Although there have been no major issues so far, investors have moved some of their holdings to other rival cryptocurrencies in anticipation of glitches.
Also, the US dollar has been weakening against its peers due to political chaos in Washington. For one, Trump has threatened to impose a government shutdown if he doesn’t get the funds to build his wall. Although not a lot of people think he can actually do so, the fact remains that the government is approaching its debt ceiling and might need to raise it to avert a shutdown by October.
Fed head Yellen’s Jackson Hole speech also turned out dollar bearish because it cast doubts on a September rate hike. The NFP report is due this week and it’s the last major piece of data before the next FOMC meeting, so a downbeat read could mean more dollar weakness and LTCUSD gains.
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